NEW DELHI: As the new financial year begins, there will be a host of changes in how you spend money. Here is a look at all the changes that will impact your money in FY22:
Tax on PF interest
As announced in the Budget 2021, if deposits in Employees’ Provident Fund (EPF) and Voluntary Provident Fund (VPF) by an employee exceed Rs 2.5 lakh in a financial year, then the interest earned on the contributions exceeding Rs 2.5 lakh will be taxable.
Further, in case there is no contribution by the employer to the EPF account (usually in case of government employees), then interest will be tax-exempt for the deposits up to Rs 5 lakh in a financial year. Thus, in the new financial year to avoid tax on the PF interest, ensure that the deposits in your EPF account do not exceed the specified limits mentioned above.
Reduction in time limit for filing revised ITR
Another Budget 2021 announcement was the reduction of the time allowed for filing belated and revised income tax return (ITR) by three months. The new rule is effective for the income tax return (ITR) filing for FY21. As per the earlier rule, if you had missed the deadline for filing ITR for FY-21, you would have had time till March 31, 2022, to file the belated ITR, albeit by paying a maximum penalty of Rs 10,000.
However, with the reduction in the time-limit now you have time till December 31, 2021, to file a belated ITR, thus three months less to file it. Besides, the government has clarified the penalty that will be levied on the filing of belated ITR. If an ITR is filed after the expiry of the deadline (usually, July 31, 2020) but on or before December 31, 2021, then the filer is liable to pay a late fee of Rs 5,000.
No advance tax penalty on dividend income
Budget 2021 has changed the rules such that if there is a shortfall in advance tax instalment or failure to pay the same on time due to dividend income, then no penal interest shall be charged, subject to certain conditions. This relief is available from FY21.